‘Keating 5’ Face Senate : Panel Opens Hearing on S&L; Scandal

The Senate Ethics Committee opened trial-like public hearings today on the “Keating Five” with the panel’s lawyer declaring the lawmakers helped the owner of a failing savings and loan fight an “all-out war” with federal regulators.

The senators also heard committee Chairman Howell Heflin (D-Ala.) say many Americans believe “that you were bribed, that you sold your office, that you traded your honor and your good names for contributions and other benefits.”

Special counsel Robert S. Bennett, in a role similar to a prosecutor in a court case, said in his opening statement that Sens. Alan Cranston (D-Calif.) and Dennis DeConcini (D-Ariz.) “were important players” in Charles H. Keating Jr.’s strategy to stave off federal rules and that Sen. Donald J. Riegle Jr. (D-Mich.) “played a much greater role” than he now contends.

Speaking in a packed hearing room, Bennett said Sens. John McCain (R-Ariz.) and John Glenn (D-Ohio) played lesser roles.

Four of the five senators were present for the opening of the hearing in the Senate Hart Office Building. Cranston, who said last week that he will undergo treatment for prostate cancer, was absent.

The committee could vote to rebuke any of the five or to recommend a more serious punishment to the full Senate, or to take no action against any of them. All have denied wrongdoing.

While Keating was enlisting the five senators and other lawmakers as soldiers in his battle, he was liberally doling out political contributions, Bennett said.

It is the committee’s role, he said, to determine whether that money was driving the senators to intervene with regulators on Keating’s behalf--or whether they were providing normal constituent service.

Bennett said: “I will give you many instances where acts and money were discussed at the same time and indeed hundreds of thousands of dollars, in the case of Sen. Cranston, passed in an office in this building.”

The lawyer held up jumbled pieces of a jigsaw puzzle and promised to piece together evidence in the case just as someone would complete the puzzle.

The committee members and Bennett repeatedly described the hearings as a fact-finding effort to determine whether the five senators helped Keating because of the $1.3 million they received from the former thrift operator and his associates.

While Bennett acknowledged the right of senators to intervene with regulators for constituents, he asserted, “This is not a case in all instances of simple and routine constituent services.”

All five senators have contended that they were helping Keating as they would anyone--whether a contributor or not--who complained of unfair treatment by federal regulators.

For months, the news media have reported that Bennett recommended to the committee of three Democrats and three Republicans that McCain and Glenn be dismissed from the case and that the investigation be intensified against Cranston, DeConcini and Riegle.

The committee has not released the report and asked Bennett not to state his conclusions at the hearing.